A report into the New Zealand operations of Fuji Xerox has revealed 'improper accounting' costing shareholder equity 18.5 billion yen.

Japan's Fijifilm Holdings released the report yesterday, detailing issues here.

"FXNZ conducted some inappropriate accounting from FY ended March 2011 to FY ended March 2016," the report said.

The impact of the operations at the New Zealand arm of the business on parent Fujifilm Holdings shareholders' equity was $18.5b yen, the report said.


Winston Peters, NZ First leader, released a statement last night estimating the accounting practices had resulted in a "blow out to almost $500m."

"There has to be something rotten in New Zealand when Fuji Xerox NZ's 'accounting irregularities' of $472 million could be one of the largest corporate frauds in New Zealand history but the government, the establishment and law enforcement deliberately bury their heads in the sand.

"The sum we are now talking about is far worse than the $285m that we exposed in April. We understand that FujiFilm is updating the Tokyo and New York Stock Exchanges and it will put the level of "inappropriate accounting" at a jaw dropping $472m.

"This will be big news internationally and drags our country's name through the mud," Peters said.

The Fujifilm report out yesterday from an independent committee described what happened in New Zealand but said there were also inappropriate accounting practices at Fuji Xerox Co Ltd, an Australian overseas sales subsidiary under Fuji Xerox.

"FXNZ [Fuji Xerox NZ] introduced MSAs [lease agreements] that bundled together equipment sales and maintenance services, etc, whereby equipment fees, consumables fees, maintenance fees and interest were recovered through a monthly copy service fee at the time of equipment sales," the report said.

The report found FXNZ had been exaggerating its revenue for some years and it highlighted issues with the sales, signing up customers for long-term contacts that looked cheap in the short-term but were expensive to escape from.

It was in the financial interests of some New Zealand staff to continue the practices, the report indicated.


"Inappropriate accounting of early sales recognition continued because there were incentives for the MD and employees of FXNZ such as commissions and bonuses and that structure placed an emphasis on sales," the report said.

The report blamed those at the top in New Zealand.

"At FXNZ, the board of directors did not function effectively, there was a concentration of authority with the MD of FXNZ and the business management process lacked transparency," the report said.

It recommended strengthening systems and reviewing incentive schemes, better information management and better supervisory functions of the board of directors and audit areas.